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The future is here for green investors building the net zero emissions portfolio of tomorrow

Tuesday 7 September 2021

Empowering investors with comprehensive data to uncover climate risks and opportunities

A former banker, green policy adviser and lawyer, Anna Skarbek brings a uniquely multi-faceted perspective to her role as CEO of ClimateWorks Australia. However, when asked why she has such a passion for driving the low carbon economy, Anna is surprisingly succinct.

Ultimately all investments must transition to net zero emissions. It’s an imperative. If we want a world to live in, this has to happen.
Anna Skarbek
CEO, ClimateWorks Australia

Anna now works with businesses and government to turn emissions reduction ideas into action. One of Anna’s newest, and most exciting, accomplishments is the Australian Climate Transition Index (ACT Index) – a collaboration between BNP Paribas, ClimateWorks Australia, sustainability analysts ISS ESG and the Monash University Centre for Quantitative Finance and Investment Strategies.

Launched August 2020, the ACT Index is the first Australian equities index with a specific forward-looking focus on climate transition and decarbonisation.

Essentially, it looks at how well every company in the ASX 300 will adapt and perform as we make the climate transition required by the Paris Agreement to limiting global warming to well below 2°C.
Anna Skarbek
CEO, ClimateWorks Australia

The CEFC made a $60 million cornerstone investment in the BNP Paribas green bond issuance which is linked to the performance of the ACT Index, which gives institutional investors a new way to align their investments with their sustainability commitments.

Anna is frank about the obstacles the team encountered in developing the ACT Index. “It wasn’t easy to develop a methodology that was robust and operable for an equity investment index, with sufficient granularity to cover the ASX 300,” she explains.

“We drew on our 2020 Decarbonisation Futures report, which provides guidance for Australian government and business decision-makers aiming to reach net zero. We also looked at sector level data, examining how each sector in the economy faces risks and opportunities in making the change to a net zero emissions economy. From there, we needed to determine what questions to ask, and to ensure that they could be answered through available company data.

“We ended up with a four-quadrant framework and scoring system that assesses each company’s current exposure to climate transition risks and opportunities."

We also assessed mitigation strategies across their operations, products and services. It’s important to look at all of these things, because some products and services are likely to look very different in a decarbonised future.
Anna Skarbek
CEO, ClimateWorks Australia

A founding Board member of the Clean Energy Finance Corporation, Anna has been a leading figure in the climate change debate for many years. She is the founding CEO of ClimateWorks Australia, which works with business and government to unblock the barriers to emissions reduction. Anna is also a director of Impact Investment Group, the Green Building Council of Australia and the Centre for New Energy Technologies. 

According to Anna, another challenge was explaining the ACT Index to investors. “Doing ‘first of a kind’ things is not what the financial markets are used to. New products take time. Fortunately, investors really welcomed the thoroughness of this approach. The Index has given us the opportunity to explain why decarbonising investment is so important, and why the market needs to pay more attention now, and to provide a framework for understanding how companies are impacted and can respond.”

The CEFC invested in the first issuance of these new green bonds, alongside Aware Super and QBE Insurance. 

Collaboration was key to the successful launch of the ACT Index. The Index sends a clear signal that there is an emerging pool of capital dedicated to companies that are supporting the climate transition.
Rory Lonergan
Executive Director, CEFC

And when it comes to the influence of investors, Anna is emphatic. “The key step is for investors to demand a net zero approach, and to back products that are already doing that. The ACT Index is one of those products. There can and should be many more.”

Read more about the ACT Index

Articles, 2021